The Real Impact of High Transportation Costs

During the 1990s and the first part of the 21st century, the high availability and low cost of transportation services relative to the cost of holding inventory encouraged organizations to emphasize fast, frequent delivery to customers through such means as just-in-time delivery. But things have changed dramatically in the last decade, and companies increasingly are calling such long-standing strategies into question. The “game changers” are volatile, escalating oil prices and an imbalance of supply and demand for freight transport services. These realities have led to high transportation costs—high enough to cause companies to make transport-driven shifts in their supply chain strategies.